Contract Costing || CMA Intermediate || Notes || Cost Accounting

 Contract Costing

Basic Terms In Contract Business

• Contract Price
• Value of Work Certified
• Degree of Completion
• Cost of Work Done
• Cost of Work Uncertified
• Notional Profit
• Actual Profit
• Cash Received / Progress Payment Received
• Retention Money

Formula

• DOC        =  WC/CP  *  100
• Value of work Certified     =      CP    X    DOC

• Cost of Work Certified    = Cost of work Done    -     Cost of Work Certified

• Cost of Work Uncertified   =    Cost of Work Done     X   % of Work uncertified                                                            % of Work Done

• % of Work Uncertified     =  % of Work Done    -  DOC

• Cash Received  =   Value  of work Certified    X    % of Cash Received     

• Notional Profit  =Value of Work Certified - Cost of WUC - Cost of WD  

• Retention money  =  Value of WC   X  % of Retention Money

                                                                      OR

                                             

Cost of Work Done

     Mat. Consumed at Site

(+) Wager

(+) Indirect Exp.

(+) Supervision Charges

(+) Depreciation of fixed Assets

(+) Sub-Contract Charges

(+) Other Misc. Expenses

Accounts Prepared In the books of Contractor

1. Contract A/c
2. Distribution of Notional Profit
3. Balance Sheet

Distribution of Notional Profit

• Profit T/f To Costing P&L A/c  
• Profit T/f To WIP Reserve A/c

Estimated Profit

Contract Price - Total Estimated Cost

#Total Estimated Cost = Cost of WD - Futher Cost

#Estimated Profit = CP - Total Estimated Cost

Definitions

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